VOXCOM Income Fund
TSX : VOX.UN

VOXCOM Income Fund

March 22, 2007 06:00 ET

VOXCOM Income Fund Announces Year-End and Fourth-Quarter Results

EDMONTON, ALBERTA--(CCNMatthews - March 22, 2007) - VOXCOM Income Fund (TSX:VOX.UN) (the "Fund") today announced its operating results and financial performance for the three months and year ended December 31, 2006.

Highlights:

- Total 2006 revenue of $39.3 million, a 9.2 per cent increase compared to 2005

- Gross profit for 2006 increased 8.6 per cent from 2005 to $29.0 million

- Normalized EBITDA for the year increased by $2.0 million, or 11 per cent, to $20.5 million

- Declared cash distributions for the year totaling $9.0 million, for a payout ratio of 92.4 per cent

- Number of customer accounts at December 31, 2006, was 120,300, an increase of 12,100 from December 31, 2005

"This was a year of solid progress for the Fund. We had steady organic growth in our customer base and also successfully integrated five account portfolios acquired during 2006," said Brad Sparrow, President and CEO of VOXCOM. "Our National Marketing program was strengthened through new partnerships with The Home Depot and Scotiabank and we also extended our technical capabilities to offer customers upgraded video and remote monitoring services. We are growing our customer base, selling more value-add services and our service focus continues to improve our customer retention rate."

"The fundamentals of our recurring-revenue business model remain strong despite the government's proposed tax plan for income trusts which created uncertainty in the capital markets. We are optimistic about our future and for 2007 we remain focused on creating unitholder value through serving more customers from our scalable infrastructure," said Mr. Sparrow.

For the year ended December 31, 2006, compared to the same period last year:

- Total revenue increased by $3.3 million to $39.3 million, an increase of 9.2 per cent. The increase is due to growth in the total number of customers and the number of additional services received by its customers as a result of efforts by the Authorized Dealer network and the National Marketing programs, as well as business acquisitions completed throughout the year.

- Gross profit increased by 8.6 per cent to $29.0 million and represented 73.7 per cent of total revenue. The increased gross profit is attributable to the increase in total revenue arising from the greater number of customers. The reduction in the gross profit margin reflects increased costs associated with growth in staff and the higher average wage cost.

- Sales and marketing expenses increased $0.3 million over the same period last year, representing 3.5 per cent of total revenue and reflecting the efforts to increase the volume of new customers generated by the Authorized Dealer network and National Marketing programs. General and administration expenses were $7.0 million, consistent with last year and representing 17.8 per cent of total revenue, as compared to 19.6 per cent for 2005, which included some one-time costs related to the IPO.

- Earnings from operations before interest, taxes, depreciation and amortization ("Normalized EBITDA") increased by $2.0 million, or 11.0 per cent, to $20.5 million. Normalized EBITDA now represents 52.1 per cent of total revenue, as compared to 51.2 per cent in the same period last year. The $2.3 million increase in gross profit was partially offset by higher selling and marketing expenses.

- The Fund declared 12 cash distributions to unitholders totaling $9.0 million ($1.1004 per unit) from distributable cash of $9.8 million ($1.1907 per unit), for a payout ratio of 92.4 per cent.

- Total number of customers at year end was 120,300, compared to 108,200 last year. The annualized RMR attrition rate decreased to 8.3 per cent from 8.9 per cent.

For the three months ended December 31, 2006, compared to the same period last year:

- Total revenue grew by $0.9 million to $10.2 million, an increase of 9.8 per cent.

- Gross profit rose by 11.1per cent to $7.6 million and represents 74.2 per cent of total revenue.

- Normalized EBITDA increased by $0.3 million, or 7.0 per cent, to $5.3 million for the quarter. Normalized EBITDA represents 51.8 per cent of total revenue, as compared to 53.2 per cent in the same quarter last year.

- The Fund declared three monthly distributions totaling $2.3 million, from distributable cash of $2.5 million, for a payout ratio of 91.8 per cent.

Statement of Distributable Cash (See Non-GAAP Measures)

A reconciliation of distributable cash to cash flows provided by operating activities as required by CSA Staff Notice 52-306 is provided below. Distributable cash, as reconciled to the cash flows provided by operating activities, did not differ from the Fund's prior methodology of distributable cash being calculated as Normalized EBITDA reduced by customer retention costs, interest expense, taxes and maintenance capital expenditures.



Three Three 226-Day
Months Months Year Period
(in thousands of dollars, Ended Ended Ended Ended
except per unit amounts) Dec 31, Dec 31, Dec 31, Dec 31,
(unaudited) 2006 2005 2006 2005
----------------------------------------------------------------------------
Cash flow provided by operating
activities $ 3,609 $ 4,132 $ 15,644 $ 9,185
Customer retention costs ($1,825) ($1,864) ($7,241) ($4,539)
Maintenance capital expenditure ($121) ($68) ($340) ($125)
Changes in working capital $ 792 $ 165 $ 1,690 $ 1,338
-------------------------------------------
Distributable cash $ 2,455 $ 2,365 $ 9,753 $ 5,859
-------------------------------------------
Distributions declared $ 2,253 $ 2,253 $ 9,013 $ 5,554
-------------------------------------------
Net earnings per unit $ 0.2247 $ 0.1895 $ 0.6436 $ 0.4477
Distributable cash per unit $ 0.2997 $ 0.2887 $ 1.1907 $ 0.7153
Distributions declared per unit $ 0.2751 $ 0.2751 $ 1.1004 $ 0.6781
Distributions
declared/distributable cash 91.8% 95.3% 92.4% 94.8%


Operating Results for the Three Months and Year ended December 31, 2006 and
December 31, 2005

VOXCOM VOXCOM
Income Income VOXCOM
Fund Fund Income Combined
Three Three Fund Results
months months Year Year
(in thousands of dollars, ended ended ended ended
except per unit amounts) Dec 31, Dec 31, Dec 31, Dec 31,
(unaudited) 2006 2005 2006 2005(1)
----------------------------------------------------------------------------
Revenue
Monitoring and Service Revenue $ 9,961 $ 9,072 $ 38,391 $ 35,179
Installation Revenue $ 243 $ 219 $ 932 $ 837
Total Revenue $ 10,204 $ 9,291 $ 39,323 $ 36,016
Gross Profit $ 7,575 $ 6,821 $ 28,969 $ 26,685
Gross Profit Margin - % of total
revenue 74.2% 73.4% 73.7% 74.1%

RMR - end of period $ 3,186 $ 2,887 - -

Operating Expenses
Sales and Marketing $ 381 $ 274 $ 1,370 $ 1,063
Sales and Marketing - % of total
revenue 3.7% 3.0% 3.5% 3.0%
General and Administration $ 1,878 $ 1,579 7,004 $ 7,059
General and Administration - %
of total revenue 18.4% 17.0% 17.8% 19.6%
Stock-Based Compensation $ - $ - $ - $ 560
Amortization $ 3,722 $ 3,036 $ 13,566 $ 11,749

EBITDA
Normalized EBITDA $ 5,287 $ 4,940 $ 20,482 $ 18,449
Normalized EBITDA - % of total
revenue 51.8% 53.2% 52.1% 51.2%

Other Expenses
Financing Expenses $ 912 $ 647 $ 3,208 $ 5,331
Income Tax (Recovery) ($1,159) ($267) ($1,451) ($232)

Net Earnings
Net Earnings $ 1,841 $ 1,552 $ 5,272 $ 1,155
Net Earnings per Unit $ 0.2247 $ 0.1895 $ 0.6436 $ 0.4477

Customer Growth and Retention
Total Number of Customers 120,300 108,200 120,300 108,200
Total Number of Additional
Value-Added Services 76,400 61,900 76,400 61,900
RMR Attrition Rate - Security
Accounts (annualized) 8.0% 8.5% 8.3% 8.9%

(1) The December 31, 2005 amounts are a proforma combination of the audited
financial results of the Fund for the period May 20, 2005 to December
31, 2005, and the unaudited financial results of VOXCOM Incorporated for
the period January 1, 2005 to May 19, 2005.


Conference Call and Webcast

Management will host a conference call to discuss 2006 results on Thursday, March 22, 2007, at 11 a.m. ET. To access the call, dial 416-644-3416 or 1-800-732-9303. A recording of the call will be available as until midnight March 29, 2007. To access the recording, dial 416-640-1917 or 1-877-289-8525, followed by passcode 21220958#. The conference call will also be available via webcast at www.voxcomincomefund.com.

Forward Looking Statements

This document may contain "forward-looking" statements which involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Fund, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements.

Additional information relating to the Fund, including all public filings, is available at on SEDAR (www.sedar.com) and at www.voxcomincomefund.com.

Non-GAAP measures

EBITDA and distributable cash are non-GAAP financial measures, but management believes they are useful in measuring the Fund's performance. Readers are cautioned that these measures should not be construed as alternatives to net income or loss or other comparable measures determined in accordance with GAAP as an indicator of the Fund's performance or as a measure of the Fund's liquidity and cash flow. The Fund's method of calculating non-GAAP measures may differ from the methods used by other issuers and accordingly, the Fund's non-GAAP measures may not be comparable to similarly titled measures used by other issuers.

About VOXCOM Income Fund

VOXCOM Income Fund holds all the issued and outstanding common shares of VOXCOM Incorporated ("VOXCOM"). Information about VOXCOM Income Fund can be found at www.voxcomincomefund.com.

VOXCOM is a national leader of security alarm installation and monitoring services in Canada, serving more than 122,000 residential and commercial customers. VOXCOM provides monitoring services for security alarm systems and LifeCall emergency response systems to all provinces from its head office and call centre in Edmonton, and has branch offices in major centres across the country. VOXCOM also maintains extensive marketing partnerships and a network of Authorized Dealers throughout Canada. Information about VOXCOM Incorporated can be found at www.voxcom.com.

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